How to Talk About Money in a Relationship

About a year before my husband and I tied the knot, we had a financial powwow over margaritas (just one each). We wrote down our personal “numbers” — including savings, debt, and credit scores — on Post-its. Then we did a swap. It’s a story I share often and something I know helped us set the stage for a healthy financial relationship.

As my friend and financial author Beverly Harzog says, “You don’t want to wait until you’re madly in love and committed before finding out your future husband has a terrible credit score and $30,000 in credit card debt.” After all, arguments about money are a leading predictor of divorce.

If you’re in a serious relationship or planning to tie the knot, here are seven things you should talk to your partner about now. (Already married? It’s not too late.)

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Money Talks

About a year before my husband and I tied the knot, we had a financial powwow over margaritas (just one each). We wrote down our personal “numbers” — including savings, debt, and credit scores — on Post-its. Then we did a swap. It’s a story I share often and something I know helped us set the stage for a healthy financial relationship.

As my friend and financial author Beverly Harzog says, “You don’t want to wait until you’re madly in love and committed before finding out your future husband has a terrible credit score and $30,000 in credit card debt.” After all, arguments about money are a leading predictor of divorce.

If you’re in a serious relationship or planning to tie the knot, here are seven things you should talk to your partner about now. (Already married? It’s not too late.)

Plan a Money Date

The first step toward building a solid foundation around money in your marriage is to have a candid conversation in which you openly discuss the basics and share your financial experiences, hopes, and fears. “It starts with a heartfelt talk,” says David Bach, author of Smart Women Finish Rich and vice chairman of Edelman Financial Services. Plan a money date, he says, where you take turns answering questions: What’s your biggest financial fear? How did your parents manage money? What’s your biggest short-term financial goal?

Money management expert Lauren Greutman echoes Bach’s advice and adds that you may want to discuss your financial “bucket list,” as well, to see whether your values match up. Some red flags, according to Greutman: you can’t agree on the size and location of the home you want to live in; one of you advocates stay-at-home parenting while the other doesn’t support it; you’re at odds about how much to spend on your wedding.

Strengthen Your Savings

Marriage sometimes comes with the added benefit of two individual salaries, but it can also mean increased costs from paying for the wedding to buying new furniture and possibly purchasing a new home. And that may all happen in just the first year or two.

If you do plan to become homeowners, it’s not just the down payment and closing costs you’ll need for that new love nest. “If you purchase a home right away that needs a lot of work, [the cost] can add up quickly,” says financial blogger Lauren Bowling. “Even minor cosmetic repairs can be stressful.”

If you don’t have a strong savings reserve, now’s the time to fuel up. Aim for a six- to nine-month cushion to help pay for these big-ticket married-life incidentals.

Squash Your Debt

While your future spouse won’t likely be technically responsible for debt you incurred prior to tying the knot, it will be a collective hindrance once you’re married and attempting to accomplish financial goals together. Commit to significantly reducing your debt before getting married. If it’s way out of hand, work with a credit counselor.

If it’s your partner who has mounds of credit card debt and is still charging things, urge him or her to work on erasing those balances now, says Barbara Stanny, author of Sacred Success. Otherwise, the pressure’s on both of you to work your way out of that debt once you’re married. “Excessive debt with no attempt to manage it would be a deal breaker for me,” Stanny says.

Update Your Will and Life Insurance

In the honeymoon phase you may not remember — or want — to revisit your existing estate plan and life insurance policy, so updating your beneficiaries in these documents now to include, perhaps, your soon-to-be lawfully wedded partner may be best.

“While this might not be the most cheerful step in the marriage process, you’ll have more confidence knowing that it has been taken care of and feel better about the security of your future. Tragedies do happen and it’s best to be prepared,” says Derek Olsen, co-author with his wife, Carrie, of the forthcoming book One Bed, One Bank Account.

Swap Credit Scores

Your mate’s credit score can be very telling in terms of the type of financial personality you’re about to marry — and vice versa. In a recent FreeCreditScore.com survey, 30 percent of women and 20 percent of men said they would not marry someone with a poor credit score.

Not saying you should call off the wedding if your partner has subpar credit, but it’s important to get this out in the open soon so you can work on repairs. “Honestly, this is a lot like sharing details about potentially risky sexual behaviors in the past,” says Manisha Thakor, director of wealth strategies for women at Buckingham and The BAM Alliance. “This isn’t about judging each other. It’s about loving and trusting each other enough to get financially naked.”

Consider a Prenup

Prenuptial agreements have more relevance these days (and less stigma). “This is not our parents’ world where people got married in their twenties and came to the union with a blank financial canvas,” says Thakor. “Increasingly we are finding ourselves marrying with much fuller pasts. We may come to marriage with children, with a desire to take care of our parents in their elder years, with debt, with large savings from prior working years.”

If you’re unhappy with your state’s laws surrounding divorce and the division of assets, you may want to draft a prenuptial agreement to state your own financial requirements in the event of a breakup. For example, in community property states like California and Texas, the “50/50” divorce laws stipulate that partners must split assets including savings, property, and even debt amassed while married. “It’s a shrewd financial move if one person has significantly more assets or greater earning potential,” says Valerie Rind, author of Gold Diggers and Deadbeat Dads: True Stories of Friends, Family, and Financial Ruin.

A prenup may be particularly helpful if you’re about to embark on a second marriage or for couples marrying later in life. “It’ll determine how those assets built up over a lifetime are protected,” says Deborah Moskovitch, author of The Smart Divorce. “You may already have children and a home. In the case of divorce, or even death, you want to protect your assets so they can be handed down.”

To explore prenuptial agreements, you can search online and find sample contract templates at Findlaw.com and RocketLawyer.com. If your prenup requires above-average legalese, consider working with an estate-planning attorney.

Compare Company Health Benefits

Does your partner have a better health insurance policy, or do you? If you plan to have kids, which health insurance has a more robust and comprehensive plan for expecting moms?

Get to know this now so that once you’re married you can quickly decide whether it’s worthwhile to piggyback on either one of your group health plans (if applicable). There may be a bit of paperwork involved to make the switch, so square this away and have it ready to submit once your marriage license comes through. Acting fast may also help to avoid any gaps in coverage.

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Farnoosh Torabi is a personal finance expert, author, TV personality, and sought-after speaker whose mission is to help people take control of their finances so they can live their richest, happiest lives. A frequent financial contributor to Yahoo!, The Today Show, ABC, and All You Magazine, she has personally coached a wide range of audiences, from college students, to couples, to executives at Fortune 500 firms. Her latest book, When She Makes More: 10 Rules for Breadwinning Women, hits shelves May 2014.

To learn more about Farnoosh, or to discover how you can live a richer, happier life, please visit her website: http://farnoosh.tv.